When teaching editing, I typically have my students work in two completely separate steps: content editing and mechanical editing.
The first step is to edit for content. This means editing for purpose, logical organization, flow, and overall readability. If a paper or an essay lacks overall focus or purpose, is illogically organized, lacks examples and elaboration on points, or is generally hard to follow, there is no point in editing for the mechanical mistakes because likely the bulk of the paper needs to be rewritten. In my opinion, content editing is easiest to do at the outline level.
The second step is mechanical editing. Once the content of the paper is correct, this step in editing looks at the nit-picky mechanics. This means checking for things like correct spelling, complete sentences, correct punctuation, and correct use of pronouns and verbs.
A third step can be added to the editing process but is only necessary when you are ready to take your writing to a higher level. At this point, minor changes to wording might help "clean up" a paper by simplifying the language or getting to a point more directly. I often tell my students, after editing for content and basic mechanics, to "polish" their final paper by re-reading one final time and attempting to remove 10-20 more words. Often, what has been said in 10 words can be better said in 5.
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